Question
Chudzick Company has a factory machine with a book value of $151,000 and a remaining useful life of 6 years. A new machine is
Chudzick Company has a factory machine with a book value of $151,000 and a remaining useful life of 6 years. A new machine is available at a cost of $250,500. This machine will have a 6-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $599,000 to $507,000. Prepare an analysis that shows whether Chudzick should retain or replace the old machine. (If an amount reduces the net income then enter with a negative sign preceding the number or parenthesis, e.g. -15,000, (15,000).) Variable costs New machine cost Keep Equipment +A The old factory machine should be Replace Equipment A Net Income Increase (Decrease) +A
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